I have some $s idly sitting on a 3 basis point savings account (yes, very dumb) and wanted to look at what else was out of zone from the likes of Wealthfront, Lending Club, Fidelities of the world and retirement accounts. I came upon MotifInvesting, a pretty neat tool for some of us out there who think certain markets are interesting and / or will take off in the future, but really don’t have the time to actually dig deep into the million 10ks and research reports to make intelligent decisions on the fundamentals of individual businesses. Well done Hardeep Walia!
So, the way Motif works is you can invest in an idea, on trends or on current events. Say you think data analytics, or mobile payments, or healthy eating, or environmentally savvy companies or Japan’s quantitative easing rules are all going to make certain companies tick up. You create a “motif”, theme if you will, which can contain upto 30 stocks, pertaining to that topic. The motif “Big Data” for example has companies like Teradata, Splunk, TIBCO software in it. “Healthy and Tasty” has Vitamin Shoppe, Whole Foods and GNC Holdings. “Software as a Service” has Salesforce, Workday and Demandware. What’s even cooler is that if you think “hmm, GNC Holdings is really not that interesting, or you hate extra protein infused bulges”, you can remove that company and include one you think is more pertinent to the theme you are trying to invest in. You can also create and tailor your own motif which gives you your bespoke portfolio. And if others agree with you, they can invest in that motif as well and you can earn royalties. The concept is you basically get to have your own custom made ETF, re-custom it whenever and size it however. The fees are at $10 per motif which is beyond pretty reasonable.
One thing to look out for btw is that the default setting when opening an account is set to allow for “investing on margin” versus “investing using cash on the account”. If you are not a sophisticated investor, the former is not the way you want to go. Investing on margin means being able to borrow money from Motif to fulfill trades and while the idea of using someone else’s money to buy “a-buy” stock is great, it does come with its hidden risks, pitfalls with interests and everything else that might make you hate Mr. Walia. There are pros though for sure but learn more about it here, here and here; for some young-ins the likes of Cooper Hefner, margin investing might not be the worst idea either.
I signed up for an account yesterday, although I am pretty certain I won’t be able to flexibly use the platform – one of the perks of being employed at a SEC registered company. For those of you on the private side privy to material non-public information, I do think the platform is too hands-on to deal with the compliance hassle, but what a stellar product merging finance and technology. TechieC agrees.
"I am a better investor because I am a businessman, and a better businessman because I am an investor" - Warren Buffett